DOJ’s big crypto crackdown

No one could accuse the US Department of Justice of twiddling its thumbs.

In the past three days alone the DOJ announced criminal charges against no fewer than six defendants in four separate cases for their alleged involvement in cryptocurrency-related fraud. Also indicted was a man in Nevada whose $45mn metaverse grift is alleged to have claimed a staggering 10,000 victims.

If convicted on all counts, the seven defendants could spend a combined 310 years in prison. Who knows — maybe we’ll all be using bitcoin to pay for stuff by the time they’re out.

Here’s a summary of the DOJ charges:

Way out ahead in terms of potential years behind bars is David Saffron of Las Vegas, whose crypto investment platform Circle Society may be more pyramidal in shape. Saffron promised investors returns of up to 600 per cent and led investor meetings “at luxury homes in the Hollywood Hills and elsewhere,” while traveling with a “team of armed security guards in order to create the false appearance of wealth and success”. Saffron used the $12mn he raised exclusively “for his own personal benefit,” the special agent in charge of the case says. He faces up to 115 years in prison.
Next up is Michael Alan Stollery, CEO of investment platform Titanium Blockchain Infrastructure Services, whose initial coin offering raised $21mn. The DOJ says that, to entice investors, Stollery “falsified TBIS white papers, planted fake testimonials on TBIS’s website, and fabricated purported business relationships” with the US Federal Reserve Board and companies including Apple, Pfizer and Disney.
EmpiresX may not be what it seemed. The crypto investment platform run by Emerson Pires, Flavio Goncalves and Joshua David Nicholas was, you guessed it, a suspected Ponzi scheme. The trio is alleged to have made off with $100mn of investor cash, and might have gotten away with it, too, had there not been traces all over the pesky blockchain.
Vietnamese national Le Anh Tuan could go down for 40 years for his alleged involvement in the Baller Ape NFT rug pull, which is said to have cost investors around $2.6mn. The DOJ accuses Tuan and his collaborators of laundering funds via so-called “chain hopping” — a process by which one coin is converted into another, with the proceeds shifted onto multiple blockchains using swap services to obscure the trail.
Last but not least is Las Vegas resident Neil Chandran, who’s accused of tricking 10,000 investors into believing his metaverse venture was about to hit the big time:

The DOJ indictment alleges that “Chandran caused other individuals to make various materially false and misleading representations to investors, including that (a) investors in Chandran’s companies would soon receive extremely high returns when one or more of those companies was purchased by a group of wealthy buyers, (b) investor funds would be used for normal expenses to keep the companies operating until they were purchased, and (c) prominent business figures, including two billionaires, were involved in the purchase.

“In fact, according to the indictment, there was no such buyer group that was about to purchase the companies for the claimed returns. A substantial portion of the funds were allegedly misappropriated for other business ventures and the personal benefit of Chandran and others, including the purchase of luxury cars and real estate; and there were no prominent billionaires involved in purchasing Chandran’s companies.”